April 2018 - First 4 Commercial

Tips for a successful loan application

When you’re applying for a loan, it’s important that you try to get your application right the first time around, especially if you need the money for something time sensitive. In this post, we’ve complied a few tips to help you achieve a successful loan application.

  • Ensure you give the correct information. The smallest of mistakes can negatively affect your application, and even get it rejected. Check spellings, your street address, and the accuracy of all the information you’ve provided.
  • Check your credit report before you apply. You can use a wealth of various credit checking sites to see what your current score and report is. Do this before you apply for a loan to avoid wasting both your time, and the financial lender’s time.
  • Build your credit history. If you’ve never had a loan or a credit card, it’s difficult for a financial lender to figure out how good you are at managing money and repaying what you owe. This could stop them from lending to you.
  • Don’t apply if you’re currently paying back another loan. This is a cycle of debt, and the financial lender will be wary about lending to you while you’re still paying off other loan debt.
  • Understand how the loan works. You won’t get assistance by asking nicely, but by proving that you understand the policy of the company, and how paying the loan back works.

Using these tips, you should be well on your way to creating an excellent loan application.


How to get the best commercial loan

If you’re looking for a commercial loan, chances are you’ve just started looking into business loans that you’re eligible for. When searching for a commercial loan, you’ll find that the results you get back from the internet are extensive, to say the least. Below, you’ll find a step-by-step guide to help you figure out how to get the best commercial loan.

1. Think about why you need a commercial loan

Commercial loans can be used for a range of business needs but are mostly used to fund business ventures or cover business costs that occur in the operation of your business. Determining why you need the commercial loan will help you find the best one for you.

2. Look at the loans available

Like all loans, commercial loans come in all shapes and sizes. Research into the ones available; how much you can borrow, interest rates, and if there are any limitations on what they can be used for.

3. Find out what you can qualify for

Depending on various factors, you may not be eligible for all available loans. Read up on those that have peaked your interest and check the criteria with the financial lender.

4. Gather your information

Once you’ve enquired and found a loan you’re eligible for, have a look at the loan application and start putting together all of the required information you need to supply.

5. Apply

Fill in your application, check it for mistakes, and click submit. Finally, wait for a response from the lender.


Bridging loans and moving home

There are two main bridging loan types: the closed bridging loan, and the open bridging loan. Closed bridging loans are typically used by individuals buying homes that have already exchanged on the sale of their existing property. Open bridging loans, however, are usually taken out by buyers who have found their ideal property but might not want to put their current home on the market yet.

If you have the option to use a bridging loan, you may be able to tide yourself over in the short term of any unforeseen expenses that could come from the purchase process. For example, for homeowners whose buyer is delaying the purchase, or if it seems like a deal might fall through. For buyers, if there’s an issue with the sale, you have the option of a second mortgage or a bridging loan.

Unless you are certain when a home sale will be confirmed, you should avoid taking on debt like a second mortgage. This is where a bridging loan comes in. The financial provider will want to see the details of the mortgage you’ve taken out for the new property you’re purchasing, as well as proof that your current home is on the market at present. They’ll also want to know how you expect to meet the repayments, and what your exit strategy is if the sale of your home falls through.

Bear in mind that bridging loans have higher interest rates than a lot of other loan types. Consider talking to the other party and your solicitor about your concerns before you take out a loan.


Repaying a bridging loan

Bridging loans usually have higher interest rates than most other loans available from financial lenders, so you should be cautious about taking one out. However, if a bridging loan is definitely the way you need to go, you should have a strategy in place for when you need to start making your repayments.

Before your loan application is approved, you’ll need to prove that you’ll be able to meet the repayments with the interest attached to them. Unless you have agreed otherwise with financial provider, bridging loans typically last no more than 18 months, though some providers will only allow up to 12 months.

Some loans are structured so that the interest is paid each month, whereas others include the interest as part of the full loan repayment. Interest rates typically start from 1.5% a month, or 18% APR. Though some providers do offer rates as low as 1% per month.

Whether you have a closed bridging loan or an open bridging loan, there is nothing stopping you from repaying the loan earlier than the original repayment date. A closed bridging loan requires the borrower to show that they can raise the funds to repay the loan by the repayment date, whereas, an open bridging loan requires the borrower to pay their loan back on or before the repayment date. For an open bridging loan, it’s suggested that the borrower repays as quickly as possible to avoid some of the interest that is added on as time goes on.

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